Talk of cutting taxes increasing in Wisconsin

FILE - In this Nov. 14, 2013 file photo, Wisconsin Gov. Scott Walker speaks during a news conference at the state Capitol in Madison, Wis. Walker has floated the idea of eliminating the income tax, but it's been met with a lukewarm reception at best. (AP Photo/Wisconsin State Journal, M.P. King, File)

MADISON, Wis. — Talk of cutting taxes in Wisconsin is starting to grow heading into a major election year.

The ideas vary widely — everything from a narrow sales tax holiday to outright eliminating the state income tax. Whether anything can be done next year, and to what degree, will likely be dictated by how rosy updated tax collection estimates are when released in mid-January.

Gov. Scott Walker has not proposed any tax cuts for the coming legislative session, but he's pulled surprises before. In October he cited higher-than-anticipated tax collections when he hastily announced a $100 million property tax cut.

Walker unveiled that plan just three days after Democrat Mary Burke got in the governor's race. In November, 17 of 33 state senators and all 99 Assembly members are on the ballot, along with Walker.

Walker, in an interview with The Associated Press, said during the campaign next year he plans to "lay out a whole bunch of promises" including tax reform. He's already dispatched Lt. Gov. Rebecca Kleefisch and Revenue Department Secretary Rick Chandler to businesses around the state to gather ideas.

Burke, a former state Commerce secretary and executive at Trek Bicycle Corp., has yet to detail her own tax reduction plans but will do so during the campaign, her spokesman said.

One idea Walker has already floated, but not officially proposed, is eliminating the state income tax. That's been met with harsh opposition from Democrats and others and a lukewarm reception from Assembly Speaker Robin Vos, a Republican.

Eliminating the income tax would be "a little tough to do" because of how much sales taxes would have to go up, Vos said.

"I don't want Wisconsin to have the highest sales tax in the country," Vos said. Although Vos said he was interested in the concept, he said it wasn't anything the Legislature would look at seriously until 2015 at the earliest.

Democrats and others point out that eliminating the income tax and increasing sales taxes will hurt the poor, who have little or no income but still purchase goods and services that will be subject to higher taxes.

The Wisconsin Council on Children and Families released one analysis that showed only the top 20 percent of earners — those who make an average of $113,000 a year or more — would see taxes drop if individual and corporate income taxes were repealed. That study assumed that the state sales tax rate would increase from 5 percent to 13.5 percent to make up the difference. All but 10 of Wisconsin's counties also charge a half-cent sales tax.

"We won't create prosperity and jobs for Wisconsin by raising taxes on most families just to pay for tax cuts for the rich," said Jon Peacock, research director for the council that advocates for children and family issues.

Talk of eliminating the income tax comes after the Legislature this year passed Walker's $650 million income tax cut. The average tax filer will get $158 more refunded in 2014 as a result of that.

Instead of eliminating the income tax, if tax collections are strong enough, Vos said he could support a limited sales tax holiday.

Rep. Chad Weininger, R-Green Bay, and Sen. Rick Gudex, R-Fond du Lac, in February proposed waiving the state sales tax for one weekend in August on a variety of back-to-school items, including computers and instructional materials. It would also create a similar weekend sales tax holiday in November for purchases of appliances and other products with the Energy Star designation.

The bill has not gotten a public hearing in either the Senate or Assembly. But Vos said it's an idea he would be open to exploring "only if the revenues show we're there."

Vos said he's also open to other ideas, including more property tax cuts. On average, this year's tax cut will reduce taxes on the typical home $13 this year and $20 next year.

It's unclear what direction the Senate may take. Republican Senate Majority Leader Scott Fitzgerald hasn't said what his priorities will be, and his spokesman has said that lawmakers are waiting to see the updated tax collection numbers next month.